Market Leader Strategies

Most industries contain an acknowledged market leader. The leader has the largest market share and usually leads the other firms in price changes, new product introductions, distribution coverage and promotion spending. The leader may or may not be admired, but other firms concede its dominance. The leader is a focal point for competitors, a company to challenge, imitate or avoid. Some of the best-known market leaders are Boeing (airliners), Nestle (food). Microsoft (software), L'Oreal (cosmetics), Royal Dutch/Shell (oil). McDonald's (fast food] and De Beer (diamonds).

A leading firm's life is not easy. It must maintain a constant watch. Other firms keep challenging its strengths or trying to take advantage of its weaknesses. The market leader can easily miss a turn in the market and plunge into second or third place. A product innovation may come along and hurt the leader - as when Tylenol's non-aspirin painkiller took the lead from Bayer Aspirin or when P & G's Tide, the first synthetic laundry detergent, beat Unilever's leading brands. Sometimes leading firms grow fat and slow, losing out against new and more energetic rivals - Xerox's share of the world copier market fell from over 80 per cent to

The London International Group defend their leading position focusing on the growth markets they dominate.

less than 35 per cent in just five years when Fuji and Canon challenged it with cheaper and more reliable copiers.

Leading firms want to remain no. 1, This calls for action on four fronts. First, the firm must find ways to expand total demand. Second, the firm can try to expand its market share further, even if market size remains constant. Third, a company can retain its strength by reducing its costs. Fourthly, the firm must protect its current market share through good defensive and offensive actions (Figure 12.4).

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